FEDERAL CRIMINAL LAWYERS

Birmingham PPP Loan Fraud Lawyers

You got contacted about your PPP loan. Not by the SBA – by FBI Birmingham. Maybe IRS Criminal Investigation, possibly SBA Office of Inspector General. You’re in Birmingham, Alabama, which means the Northern District US Attorney’s Office handles your case – a prosecutorial office that’s more lenient than Montgomery’s Middle District but still pushes for federal prison time under mandatory Guidelines. Thanks for visiting Spodek Law Group. Todd Spodek is a second-generation criminal defense attorney who has handled hundreds of federal fraud prosecutions, including dozens of PPP cases in federal districts across the country.

Here’s what happens when Birmingham’s federal prosecutors investigate your PPP loan, why your Northern District location gives you some advantage over Montgomery defendants, and what you need to understand about the choices you have in the next 48 hours.

Birmingham Location Helps (But It’s Still Federal)

Federal districts aren’t uniform. The Northern District US Attorney’s Office in Birmingham operates differently than Montgomery’s Middle District. Birmingham’s Northern District is more lenient – offers more pre-indictment plea deals, doesn’t fight as hard on Guidelines calculations, draws juries from urban Birmingham demographics that tend to be more sympathetic to fraud defendants than conservative Montgomery juries. These differences translate to better plea offers and potentially shorter prison time. In April 2024, U.S. District Court Judge L. Scott Coogler sentenced Kenzarian Lemark Harris to 36 months for PPP fraud and Reginald Dewayne Rhodes, Jr. to 18 months for an $11,770 fraudulent PPP loan. Rhodes claimed to own and operate a carpet cleaning business that didn’t exist, submitted fraudulent tax and bank records.

But here’s what Birmingham defendants don’t understand: you’re still facing federal prosecution with mandatory Guidelines-based sentencing. The advantage is real but limited. Birmingham prosecutors may offer better plea deals than Montgomery, but they’re still federal prosecutors operating under the same wire fraud statutes, the same Guidelines ranges, the same pressure from Washington to prosecute pandemic loan fraud aggressively. When Birmingham business owners hire attorneys who practice state criminal defense – DUI, assault, drug cases in Alabama courts – they’re bringing state practitioners to a federal prosecution.

That “Clarification Interview”

Most PPP fraud defendants cooperate immediately without counsel. FBI Birmingham agents frame initial contact as administrative clarification. “We’re reviewing your PPP application and noticed some discrepancies. Can you help us understand how you calculated your payroll expenses?” That sounds like a reasonable request to fix paperwork errors. It’s criminal investigation.

When you sit down to “clarify” your PPP application without an attorney, here’s what’s actually happening. FBI Birmingham already subpoenaed your bank records – every deposit, withdrawal, check, wire transfer from the day you received PPP funds forward. They pulled your tax returns for 2018, 2019, 2020, 2021. They have your original PPP application, your forgiveness application if submitted, your banking institution’s records. They compared your application’s payroll figures to your 941 quarterly payroll tax filings. They know what you claimed. They know what your returns show. They know where the money went. Now they need your statements to prove intent – that you knew the information was false when you submitted it. The Fifth Amendment right against self-incrimination exists precisely for this scenario. You are not obligated to provide the government with evidence to prosecute you. But here’s what happens when defendants talk anyway. You say you “estimated” payroll based on projected hiring. That becomes evidence you knew the current payroll didn’t support the loan amount. You explain you used PPP funds for “business expenses” – rent, utilities, inventory. That becomes evidence you knew PPP was designated for payroll and certain other limited expenses. You describe consulting with your accountant who “helped with the application.” That gives prosecutors a cooperating witness to flip against you. Your own words, offered in good faith, become the evidence that establishes criminal intent.

The lawyered path functions differently. Your attorney doesn’t let you explain away discrepancies – those explanations become admissions. Instead, counsel evaluates what the government has, what they can prove without your statements, and whether the evidence demonstrates knowing false statements versus negligent errors. That distinction matters because it’s the difference between wire fraud (20 years maximum) and no charges at all. In Northern District PPP cases, early intervention creates leverage for pretrial diversion, declined prosecution, or favorable plea terms. Post-statement intervention means we’re playing defense with your own admissions as the government’s best evidence.

Actual Sentencing Numbers

The theoretical maximum sentence under 18 USC Section 1014 is 30 years federal imprisonment. Wire fraud carries up to 20 years. That’s not what happens. Federal sentencing operates through mandatory Guidelines based on loss amount. The United States Sentencing Guidelines don’t have a “PPP discount” or “pandemic sympathy” provision. Fraud is fraud. Loss amount determines your base offense level, which determines your Guidelines range, which determines your actual prison time.

Small PPP loans ($10,000 to $50,000) with clear fraud typically result in probation to 18 months for first-time offenders who accept responsibility. Reginald Rhodes received 18 months for an $11,770 fraudulent PPP loan in the Northern District, sentenced April 2024. Medium loans ($50,000 to $250,000) produce 18-36 month sentences – the most common range. Kenzarian Harris received 36 months for PPP fraud in the Northern District, sentenced April 2024. Large loans ($250,000+) result in 36+ month sentences.

Three factors affect where you land. Loss amount matters most – every dollar counts. Your criminal history matters second. No prior convictions means you’re in Criminal History Category I, lower end of the range. Acceptance of responsibility matters third. Federal Guidelines provide 2-3 level reductions if you plead guilty and accept responsibility. A defendant facing 36-48 months drops to 24-30 months with acceptance. That’s why most PPP fraud cases resolve through plea agreements rather than trial.

But here’s what changed between 2021 and 2025. Early pandemic loan fraud defendants benefited from judicial sympathy – “these were unusual times, the program was confusing, mistakes were made.” That sympathy has evaporated. Birmingham federal judges now view PPP fraud through the lens of taxpayer theft during crisis. Defendants sentenced in 2024-2025 receive prison terms approximately 40% longer than those sentenced in 2021-2022 for identical loan amounts and conduct. A $150,000 PPP fraud that generated 18 months in 2021 now generates 28-30 months in Birmingham.

Loss amount fights matter because they determine everything. If your PPP application claimed $175,000 but prosecutors can only prove $120,000 was fraudulently obtained, you just dropped from one Guidelines bracket to another – potentially 12-18 months less prison time. Birmingham prosecutors fight these calculations, though not as aggressively as Montgomery prosecutors, because they know loss amount determines sentencing exposure, and sentencing exposure determines whether defendants take plea offers or risk trial.

You have three choices. First: cooperate with FBI Birmingham without counsel. You sit for the interview, answer their questions, “clarify” your application. What happens next: your statements become prosecution exhibits. Most defendants who choose this path realize too late that the “clarification” interview was the investigation’s critical moment. By the time they hire counsel, their own words have established the government’s case.

Second: retain counsel immediately. Before any statements, before any interviews, before responding to document requests. Your attorney evaluates what the government has, communicates that you’re represented, determines whether cooperation benefits you. This is the objectively superior path. Early intervention means we control what evidence the government gets. We can negotiate proffer agreements that limit statement use, provide documentation demonstrating good faith, engage in pretrial resolution discussions before you’re locked into a public indictment.

Third: ignore FBI Birmingham. Don’t respond to calls, don’t answer emails, don’t engage. What happens: they indict you. Federal prosecutors don’t stop investigating because targets ignore them. This is the worst option. It demonstrates consciousness of guilt without providing Fifth Amendment protection, it eliminates pretrial resolution possibilities, and it signals to prosecutors that you won’t cooperate – which means they see no reason to offer favorable plea terms.

The choice you make in the next 48 hours determines your sentencing range. Todd Spodek has handled hundreds of federal fraud prosecutions, including PPP cases in districts with prosecution styles similar to Birmingham’s Northern District. We’re available 24/7 at 212-300-5196.